NEW YORK, JAN. 30 -- Optimism over the progress of war in the Persian Gulf and hopes that the recession will end soon catapulted blue-chip stocks up more than 50 points today, pushing them to levels not seen for five months.

The Dow Jones industrial average closed up 50.50 points, or 1.9 percent, to 2713.12, its highest level since Aug. 15.

Traders tied the surge to perceptions that military advances against Iraq are ahead of schedule, that the costs of the war will be manageable and that U.S. interest rates are headed lower.

Investors caught short amid the market's surge rushed in to buy, while cash-heavy money managers dipped into their hoards, driving volume on the New York Stock Exchange to 226.8 million, compared with 155.7 million Tuesday. Leading issues overwhelmed losers by more than 3 to 1.

After the blue-chip index rose more than 50 points in the final minute of trading, the NYSE imposed its curb on index arbitrage-linked market orders.

The market was buoyed by President Bush's State of the Union address Tuesday evening and by today's statements from the U.S. commander of Operation Desert Storm on progress being made against Iraqi troops and military targets.

Bush's call for "lower interest rates now" was seen by some as an ultimatum to Federal Reserve Board Chairman Alan Greenspan, who comes up for reappointment in August.

Gruntal & Co.'s Gene Jay Seagle said Gen. Norman Schwarzkopf, the U.S. commander, raised hopes that the war would be short, after a news briefing in which he said allied forces had attained air supremacy over Iraq. The market appeared to accept in stride other news of overnight land engagements in which at least two Iraqi probes across the Saudi Arabian border were repulsed.

Stock investors also took comfort from another report that hinted at resilience in the economy. The December leading indicators index rose 0.1 percent, instead of the projected decline of 0.1 percent, giving investors hope that the U.S. recession will last only two quarters, with activity picking up in the second half of 1991.

But some observers said today's rally was more a function of technical market pressures than a reflection of a dramatic new bull move. One trader said investors were feeling increasing pressure to leave the sidelines as the market gained. "They feel money burning a hole in their pocket and so they're spending it," the trader said.

Oil markets, however, took the war developments at face value and backed off. "The market felt that the war was going well," said Susan Hammargren of Geldermann Inc., commodities traders.

Crude oil for March delivery on the New York Mercantile Exchange fell 88 cents to close at $20.97 a barrel.

Analysts said the sell-off was ignited after the gulf briefing. "Schwarzkopf's comments had a calming effect," said Tom Bentz, a United Energy Inc. analyst.

Among stocks, Compaq Computer gained 3 1/2 to 66 3/4 after the company become the latest technology firm to post strong earnings.

Airline stocks climbed on recommendations by several analysts, including Salomon Inc. UAL rose 4 3/8 to 129 3/8 and AMR added 2 3/8 to 54 3/8.

Southwest Airlines rose 1 to 22 7/8 after Merrill Lynch picked it as its "focus" stock of the week.

Eaton added 5 to 55 1/4. Prudential-Bache upgraded its rating on the company to buy from hold.

Roadway Services jumped 3 1/2 to 46 3/4 after the company's fourth-quarter earnings came in well above analysts' estimates.

The NYSE composite index rose 7.92 to 408.53, the Standard & Poor's 500 rose 5.07 to 340.91, the American Stock Exchange index rose 3.90 to 314.47 and the Nasdaq over-the-counter index was up 7.92 to 408.57.